Correlation Between Fidelity Emerging and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Fidelity Emerging and Fidelity International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Emerging and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Emerging Markets and Fidelity International Value, you can compare the effects of market volatilities on Fidelity Emerging and Fidelity International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Emerging with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Emerging and Fidelity International.
Diversification Opportunities for Fidelity Emerging and Fidelity International
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Emerging Markets and Fidelity International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Fidelity Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Emerging Markets are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Fidelity Emerging i.e., Fidelity Emerging and Fidelity International go up and down completely randomly.
Pair Corralation between Fidelity Emerging and Fidelity International
Assuming the 90 days horizon Fidelity Emerging Markets is expected to under-perform the Fidelity International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Emerging Markets is 1.07 times less risky than Fidelity International. The mutual fund trades about -0.3 of its potential returns per unit of risk. The Fidelity International Value is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,087 in Fidelity International Value on August 29, 2024 and sell it today you would lose (32.00) from holding Fidelity International Value or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Emerging Markets vs. Fidelity International Value
Performance |
| Timeline |
| Fidelity Emerging Markets |
| Fidelity International |
Fidelity Emerging and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Emerging and Fidelity International
The main advantage of trading using opposite Fidelity Emerging and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Emerging position performs unexpectedly, Fidelity International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity International will offset losses from the drop in Fidelity International's long position.| Fidelity Emerging vs. Fidelity Global Equity | Fidelity Emerging vs. Fidelity Total International | Fidelity Emerging vs. Fidelity International Value |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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